The US Employment and Training Administration released new data this morning for Pennsylvania.  In the week ended Feb 27 there were 30,465 claims a decline of 4,772 from the previous week.

The four week moving average of initial claims now stands at 32,904 a decline of 15% from a comparable period in 2009.

Although the level of claims is falling compared to last year (the worst of the recession) the level of initial claims remains well above normal.

Calculated Risk provides a brief summary of the national data which is for the week ending March 6th, the 4 week average of initial claims nationally remains above 400,000 signaling continued job loss in the first week in March.

Via Krugman:

“Anyone who is willing to work and is serious about it will certainly find a job. Only you must not go to the man who tells you this, for he has no job to offer and doesn’t know anyone who knows of a vacancy. This is exactly the reason why he gives you such generous advice, out of brotherly love, and to demonstrate how little he knows the world.”

There isn’t much in the way of good news from the update to the employment situation.  Pennsylvania did add 9,600 jobs in January but we really have to see several consecutive months of that kind of growth before we can conclude that recovery has taken hold.  And on that count the US employment situation in February (US nonfarm payrolls fell by 36,000) signals we are unlikely to see as good an employment number in Pennsylvania in February.

Unemployment rates held stead in PA at 8.8% in January and for the US in February at 9.7%.

Employment gains in Pennsylvania in January were concentrated in the service sector as both construction and manufacturing continued to shed jobs.

Benchmark and Seasonal Adjustment Revisions:

With this release of employment and unemployment data the Center for Workforce Information and Analysis has incorporated two major changes in it’s historical series of unemployment and employment.  The first revision is the annual benchmark revision where estimates of job growth are replaced by actual counts derived the unemployment insurance system which provides a virtual census of employment in the state.  The benchmark revision at the national level (a decline of 902,000 jobs) and for Pennsylvania (a decline of -24,600) jobs is the largest on record.  The chief source of the revision the fact that the Bureau of Labor Statistics projects current employment using past trends in the birth and death of companies.  The contraction in economic activity associated with the Financial Crisis was far more severe than any model based on historical data could predict and thus it turns out that employment in both the nation and Pennsylvania was much lower than we thought.

To put the “Great Recession”  in context take a look at this stunning figure from the Center for Workforce Information and Analysis:

A second round of revisions have also been made this year to the seasonally adjusted data that stretches back to 1976 for unemployment data and back to 1990 for employment data.  The Bureau of Labor Statistics has changed the way it adjusts employment counts to control for seasonal fluctuations in employment.  This is done so we can compare this months employment level to last months level without having to worry whether the change we observe is real or driven by the normal pattern of hiring and layoffs we see each month.

The Lost Decade:

The following statistics are deeply depressing:

• Total employment in 2000 = 5,691,300
• Total employment in 2009= 5,608,500

For more on the national employment situation here are links to the analysis by CEPR, EPI and CAP.

The following was recently posted on the Commonwealth Foundation blog:

The Congressional Budget Office announced last month that 1.5 million jobs were created or saved by the $862 billion stimulus package, a number many use to claim the stimulus worked, and therefore we need another one.
But the CBO’s numbers are based on an economic model that assumes government spending creates jobs. Using a predetermined multiplier the model computes GDP growth for every dollar the government spends; this number is then converted into jobs created.

• Every $1 of government spending that directly purchases goods and services ultimately raises the GDP by $1.75;
• Every $1 of government spending sent to state and local governments for infrastructure ultimately raises GDP by $1.75;
• Every $1 of government spending sent to state and local governments for non-infrastructure spending ultimately raises GDP by $1.25; and
• Every $1 of government spending sent to an individual as a transfer payment ultimately raises GDP by $1.45.

Hence, the estimate of jobs created is identical to what the model predicted before the stimulus passed, and bears no connection to what actually happened.

Just to clarify the spending multipliers quoted from the CBO are empirical estimates which are within the range of estimates that are widely accepted.  The Commonwealth Foundation artfully omits that these multipliers are derived from actual research into the past relationship between government spending and employment.  They are attempting to leave the impression they were plucked out of thin air.

But what is most interesting about this post is the fact that Commonwealth Foundation on occasion contracts with economists to help it quantify the affects of various policies. For example

• they hired an economist to estimate the impact of raising the minimum wage in Pennsylvania.
• they hired economists with the Beacon-Hill institute to help estimate the economic impact of raising the personal income tax in Pennsylvania.

These reports rely upon economic models that all make assumptions to calculate the impact of the policy choice in question. Whether the impacts estimated are accurate depends on careful research that has to be done well into the future.  Still policy decisions have to be made now and so we have to rely upon models and we choose between those models based on the reasonableness of their assumptions. We for instance disagreed with the conclusions of Commonwealth Foundation minimum wage report because their model relied upon an estimate of the elasticity of labor demand that in our view was not fully supported by empirical research.  This is the stuff of economics and the stuff that economists argue about.

While obviously the folks at the Commonwealth Foundation are not economists they repeatedly rely upon the work of economists to push their policy agenda.

And yet they put up this blog post that could have easily been written about some of their own public policy research. It would seem they don’t understand how the research they buy is done and frankly I wonder if they even read the research they buy?

To be fair to the Commonwealth Foundation they were just trying to repeat a post by Brian Riedl at the Heritage Foundation.  Unfortunately they missed Riedl’s main point.  Not to worry Brad Delong and Paul Krugman did catch Riedl’s main point. Enjoy!

Can We Please Shut National Review and the Heritage Foundation Down Now?

Stupidest and most intellectually dishonest thanktanks and magazines alive…

Brian Reidl:

• “Obama’s Faith-Based Economics: The idea that government spending creates jobs makes sense only if you never ask where the government got the money. It didn’t fall from the sky. The only way Congress can inject spending into the economy is by first taxing or borrowing it out of the economy.[1] No new demand is created; it’s a zero-sum transfer of existing demand…”

What Brian Riedl doesn’t seem to realize is that the only way he can get extra money to spend is by borrowing it or selling his assets. In either case, the person he borrowed it from or sold his assets to no longer has the money to spend–and so by Reidl’s “logic” any private-sector decision to spend more (or less!) money doesn’t create (or destroy!) demand: “it’s [just] a zero-sum transfer of existing demand.” According to Reidl’s logic, no private decision to spend more or less can ever change the flow of existing demand: spending in the economy must always be a constant.

You have only to look at employment in America to understand that the claim that spending in the American economy is always a constant is simply and completely false:

According to Reidl’s logic, none of these fluctuations in the employment-to-population ratio ever happened. He and his ignorant cohorts just close their eyes, plug their ears, and the more literate and well-read of them say: “Say! Bastiat! Say! Bastiat! Say! Bastiat!”

If we move from the fantasy-land of ignorant partisan hacks into the real world in which we live, the fact that economic actors get the cash they spend by selling their assets to others, borrowing from others, or taxing others does not mean that every decision to spend creates “no new demand… [is] a zero-sum transfer of existing demand…” Reidl’s claim would be true if we lived in a pure cash-in-advance economy with a rigid technological velocity constraint–if the only way you could buy things was by paying cash on the barrelhead immediately, if you could only spend your cash once every “market day,” and if you were forced on pain of confiscation to spend your cash every “market day.” But we don’t live in such an economy. We never lived in such an economy. Even Gyges King of Lydia, inventor of coinage, did not live in such an economy.

And since we don’t live in a pure cash-in-advance economy with a rigid technological velocity constraint, everyone’s decisions to spend more or less contribute to or subtract from the flow of demand–and the government’s decisions to spend more or less are just as good as anyone else’s, for it is just another economic actor (albeit a rather large one).

This is a first-day-of-econ-1 mistake…

And briefly from Paul Krugman:

“Brad looks at John Cochrane asserting that fiscal expansion does nothing but shift money around, and tries to figure out Cochrane’s model. It’s a hopeless quest…Matter are different when we’re talking about, say, John Taylor’s anti-stimulus arguments; there is a model there, so we have to discuss the assumptions of that model and whether they look plausible. (I say no, but at least we’re having a real discussion). But when it comes to Cochrane, or Brian Riedl, there’s no there there, and Brad is wasting his time looking for it.”

The US Employment and Training Administration released new data this morning on unemployment claims. In the week ending February 20th there 35,237 initial claims for unemployment insurance in Pennsylvania. The four week moving average was 35,549 a figure which is 11% lower than during a comparable period in 2009.

Following the national release of claims data there were a raft of news reports that sounded like there was a dramatic change in the numbers that were released. Calculated Risk reviews the national numbers and makes clear there is little to celebrate in the new national data. The level of claims continues to signal net job losses in the economy.

New nonfarm payroll employment data for Pennsylvania in January will be out today. There is typically a longer lag in the release of the state level employment data for January because of a set of adjustments which US Department of Labor makes to Local Area Unemployment Statistics.

We need a Consumer Financial Protection Agency but don’t take our word for it, here are what living and dead former Presidents have to say on the matter.

To read more on what the Consumer Protection Financial Agency is and what kind of authority it needs to protect us all from Wall Street see Americans for Financial Reform.

The Federal Housing Finance Agency (FHFA) has released new data (PDF) on housing prices during the 4th quarter of 2009.  Housing prices in Pennsylvania are still falling however the price declines in the 4th Quarter were smaller than in last couple of quarters.  Immediately below are two notes on things to keep in mind as you look at seven different graphs of recent trends in housing prices in Pennsylvania.

• As you look at each graph also note whether the graph is presenting price change in the purchase only price index or in the all transaction index.  The purchase only index as its name implies measures price change in Pennsylvania for homes actually sold.  The all transaction index includes prices from home sales but also prices derived from home mortgage refinance transactions.  Price data from home mortgage refinance transactions are prices estimated by home appraisers.  Although the appraised value of the home has real economic meaning to the home owner and their bank the appraisal price tends to reflect price patterns in the recent past as opposed to current trends in housing prices which the purchase only index measures.  You can see the difference between the two measures in Figure 5.  Currently home prices in the purchase only index are falling less than home prices as measured in the all transactions index.  Why use the all-transaction index at all?  Because it is the only index of home prices that lets us see the pattern of price change for 16 metropolitan ares in Pennsylvania (there is a purchase only index for Philadelphia and Pittsburgh see Figure 5).
• As you look at each graph it is important to note whether the graph is presenting nominal price change or home price change after adjusting for inflation.  Nominal price change only considers what is actually happening in the housing market.  Adjusting home price change for inflation reveals trends in housing prices relative to other goods.  Adjusting for inflation is important because for most people in Pennsylvania their home is the primary source of wealth.  So if the price of their homes is not keeping pace with the change in the average price of goods and services then they have less wealth and that has a feedback effect on consumption decisions.

The US Bureau of Employment and Training released new data this morning on initial claims for unemployment insurance in PA.  In the week ended Feb 23 there were 34,364 initial claims.  The four week moving average was 34,376, a decrease of 17% compared to a similar period in 2009.

Calculated Risk has a brief summary of the national data on initial claims.

The US Bureau of Employment and Training released new data this morning on initial claims for unemployment insurance. In the week ended February 6th there 31,551 initial claims for unemployment insurance in Pennsylvania.

The four week average of initial claims was 34,626 a decline of 22% from a comparable period in 2009.

Because state level unemployment claims data is not seasonally adjusted we must look at year over year changes to remove trends in the data driven by seasonal hiring and layoffs.

The following chart presents the year over year change in the 4 week average of initial claims since Feb 2008.

These data clearly show a steady relative improvement in the labor market. But as I discussed last week despite this improvement the level of claims remains much higher than normal indicating continued job loss. The number of unemployed workers continues to substantially outpace the number of available jobs (by a margin of 6 to 1 nationally).

With large numbers of workers facing the prospect of their unemployment benefits running out it is critical that additional weeks of unemployment benefits be made available. Failure to extend benefits could operate as an additional drag on the labor market in the coming months.

We would like to thank the good people of the Commonwealth Foundation for bringing attention to our job announcement and the pension plan we have for our small 10 person nonprofit (you can see what the Commonwealth Foundation had to say below).

THREE OUT OF FOUR PENNSYLVANIA WORKERS employed by small employers DON’T have a pension at work (Figure 1).

The Keystone Research Center is on record supporting state and national policies that would enable more of the roughly half of all workers with NO pension through their job to access a simple 401(k).

Consistent with our values and our policy positions, KRC offers a simple IRA plan as part of its employee benefits package (along with 100% employer-paid health insurance).

KRC also supports national policies that would facilitate the portability of 401(k)-type pension plans (enabling more employees to save substantially by the time they retire) and the low-cost conversion of accumulated savings into annuities that, similar to defined benefit pensions, offer retired Americans a guaranteed annual amount of money from their pension savings

Long-term, pension security in American would be most enhanced through more reliance on defined benefit pensions for employees and employers in long-term relationships for which these pensions make sense.  We also support widespread access to pension options that most effectively balance portability and pension security for other workers.

You can read more about our position on pensions in our report Rewarding Hard Work.

What follows is full post from the Commonwealth Foundation:

Do As We Say Not As We Do

Public sector unions argue that “defined-benefit” pension plans are necessary to attract and retain good government workers.…So I thought it was rather ironic that organized labor’s “think tank” (Keystone Research Center/Pennsylvania Budget and Policy Center) posted an employment position on Harrisburg’s Patriot-News classifieds that runs contrary to everything they tell everyone else they should do:

OFFICE MANAGER
Keystone Research Center, a 10-person, Harrisburg-based progressive think tank, seeks an Office Manager to perform administrative, financial, and human resources duties, including billing and invoicing, coordination with accountant, board management, general administrative duties., and event planning duties as time allows. Substantial experience and facility with Word, Excel, and database software required; associate’s degree preferred.
Occasional late or weekend hours. Competitive salary based on experience, plus family medical benefits and 401-K type pension.[emphasis added]
Please send a letter of interest and résumé to jobs@keystoneresearch.org or fax to 717-255-7193.

Hmmm, sounds too much like the evil private sector to me.

The following figure is taken from an article by Christopher Briem of the Pittsburgh Economic Quarterly of the University Center for Social and Urban Research (Christopher also posts regularly at Null Space).

The US Employment and Training Administration released new data this morning on unemployment claims in Pennsylvania. In the week ended January 30th there were 41,042 initial claims for unemployment insurance in Pennsylvania up by more than 10,000 from the previous week.

Initial claims in January are down by about 5% from last January.

For more on the revenue a tax like this might raise in the US see this from Dean Baker, Bob Pollin, Travis McArthur, and Matt Sherman.

Read more in the State of Working Pennsylvania 2009.

The US Employment and Training Administration released new data today on Initial Claims for Unemployment Insurance. In the week ended Jan 23 there were 30,547 initial claims for unemployment insurance. In the four weeks prior to Jan 23 there were an average of 43,927 initial claims each week, a figure which is 11% lower than a comparable period in 2009.

There will be one more week of January data on initial claims released next Thursday. In the mean time the next chart summarizes the monthly average of initial claims each January from 2001 to 2010. I will update this chart again next Thursday to reflect a full month of data for January 2010. Note the elevated claims in January 2002-04 reflect the jobless recovery that followed the 2001 recession which officially ended in November 2001. The revisions will reduce employment levels by more than 800,000 jobs.

Friday the Bureau of Labor Statistics reports the job count for January. According to Calculated Risk the consensus view is a small net gain in nonfarm payroll employment and no change in the unemployment rate.

The four-week moving average of seasonally adjusted initial claims in the US as a whole was 468,750. A rule of thumb is that initial claims in excess of 400,000 indicate further job losses. So I’m leaning toward another decline in nonfarm payrolls. The unemployment rate is harder to predict but I’m leaning toward another increase in the rate.

Also of note the Bureau of Labor Statistics (BLS) will officially release with January’s numbers a revision to the job counts that takes into account new data from April 2008 to March 2009 which was not available as employment counts were reported during that period. This is a normal process but the revision will be one of the largest the BLS has made. The BLS’s estimates were off by more than normal because of the very sharp and very sudden collapse of private sector activity that occured in the six months that followed the collapse of Lehman Brothers.

A headline from the Commonwealth Foundation caught my eye this morning, “Stimulus: Saving Jobs or Delaying Recovery?“. The meat of the post summarizes well known and well understood data which demonstrates that we are in the midst of the worst recession since the Great Depression.

The money quote comes near the end:

“Evidently, the stimulus has not brought the kind of change it was intended to bring. Rather the stimulus has prolonged the recession.”

That last key phrase “has prolonged the recession” is linked to a previous article also from the Commonwealth Foundation. This article presents no evidence that the current recession has in fact been prolonged by current policy choices. We do have actual analysis by private for profit forecasters as well as the nonpartisan Congressional Budget Office that the recovery act was effective at increasing both output and employment.

While presenting no evidence to back up its claim that the recovery act has prolonged the current recession the Commonwealth Foundation article written way back in May 2009 is a very creative summary of the dates of recessions from the National Bureau of Economic Research (NBER).

Here is the key quote from that May analysis by the Commonwealth Foundation:

“It is important that policymakers recognize the ups and downs of the economy, and the lessons from past recessions, so as to not over-react to the current downturn and the political pressure to “do something.”… Severe recessions occurred in 1836, 1907, and 1921. The government intervened in none of them, and, as a result, each recession lasted no longer than a year… State lawmakers should study history and understand that government intervention hampers the recovery of the economy and supplants the private sector, while placing an enormous burden on future generations.”

The following chart identifies months the US economy was in recession (the colored bars) for two of the three recessions that the Commonwealth Foundation identifies as evidence that you shouldn’t fight recessions. The 1836 recession which is not pictured is not in the NBER list of recessions. As you will see having this third data point would do little to rescue the Commonwealth Foundation’s argument.

What you don’t get from the Commonwealth Foundation’s analysis is the whole story. What follows are all the recessions from 1857 to 2009.

So when you look at all the data you notice that since the end of the Great Depression, the era of active monetary and fiscal policy, recessions have been shorter and less frequent than in the 19th and early 20th century.

It is important to recognize that there is a debate among Economists about the relative merits of different types of policy intervention deployed to fight a recession. Some prefer activist monetary policy intervention plus automatic stabilizers like the unemployment insurance system. Others prefer a combination of activist monetary, automatic stabilizers and activist fiscal policy (tax cuts and or spending measures like in the recovery act) intervention. So while the precise prescription may differ depending on the economist most still believe in some form of policy action to fight recessions.

Furthermore the instability in the financial system which has followed the deregulation of that sector and is the cause of our current recession has done serious harm to the reputations of those whose project it was to recreate the Robber Baron economy of the late 19th and early 20th century.

MORE PLEASE!

Additional deficit financed spending is needed in order drive the unemployment rate down faster than current projections!

In a recent blog post Attack of the Minimum-Wage Increase University of Chicago economics professor Casey B. Mulligan argued:

“From December 2007 until July 2009, for every five full-time jobs lost, part-time employment increased by one job. The blue series shown in the chart aims to predict the creation of part-time jobs from the data on full-time jobs alone, by assuming that each five full-time job losses created one part-time job. The series shows how this approach closely fits not only the overall increase, but also several of the changes in trend over that period. Since July 2009, full-time employment has continued to fall, but we no longer see the partly offsetting part-time employment increase. The July 24 minimum-wage increase most likely changed that pattern. In other words, if the minimum wage had stayed at $6.55, part-time employment probably would have closely followed the blue series in the chart, as it did until July 2009.“

Below is a reproduction of Mulligan’s chart.

This leads Mulligan to conclude:

“Many economists expected that the new prohibition on jobs paying between $6.55 and $7.24 would disproportionately affect part-time jobs. After all, recall that part-time employment typically pays less per hour than full-time employment does. Some of those employers raised their pay to conform to the new minimum, but others were expected to eliminate some of their part-time positions. That’s probably why the data show that, starting with August 2009, part-time employment began to reverse its trend.“

According to the Economic Policy Institute only 31 states were affected by the federal minimum wage increase to $7.25 on July 24 2009. Another 4 states (Kentucky, Maine, Nevada, Illinois) plus the District of Columbia also raised their state minimum wage in July 2009.

The remaining 15 states already had state minimum wages greater than or equal to $7.25 by July of 2009.

So what does Mulligan’s chart look like if you break up the data according to states affected and not affected by the most recent minimum wage increase?

Here is Mulligan’s chart for states not affected by the minimum wage increase (Footnote 1):

And here is Mulligan’s chart for states affected by the minimum wage increase.

The relationship between full-time jobs lost and part-time employment breaks down in all states regardless of whether their minimum wage increased in July or not.

Observing the same break in the pattern in states not affected by the minimum wage increase demonstrates that the change in the relationship between part-time job loss is likely due to factors other than the minimum wage increase.

Thanks to Marianne Bellesorte of Pathways PA for pointing out the Mulligan post and to Kai Filion of the Economic Policy Institute for his assistance with CPS data.

Footnote 1: Following Mulligan the relationship between full-time job loss and part-time employment from December 2007 to June 2009 in the 15 states not affected by the minimum wage increase is used to project the gain in part-time jobs from full-time job loss throughout the whole period. Similarly to project part-time employment for the states affected by the minimum wage increase I used the relationship between part-time and full-time employment in these 35 states plus D.C. from December 2007 to June 2009.